This is the next topic of discussion.
Renewal of balance.
What is this? Why is it? How is it?
Let's go on the pad for this too. We have only one support.
Writing pad.
It explains all the same things to us. Let's go to
understand this point too.
On the writing pad, what is this renewal renewal? Renewal
renewal.
Let's draft the same again quickly. This is Mr. A and this
is Mr. B.
Mr. A, Mr. B. Let's keep the same scenario. Mr. A has sold
goods worth Rs. 12,000 on 1st April 2023.
That too on loan. On credit to Mr. B. Mr. B has signed a
document in return.
In which it is written that I will make the payment after
two months.
What will be the date after two months? 4th of June 2023.
Mr. B is saying that I will make the payment that day. Mr.
A said okay, no problem.
Now sir, our due date is 4th June 2023.
You will go two months ahead of 1st April. 1st June will
come.
You will add grace for three days. 4th of June 2023 will
come. This is the due date.
A few days before the due date. A few days before.
Mr. A gets a call from Mr. B. A's phone rings.
Mr. A takes out the phone and sees that Mr. B's name is
written on it.
Mr. A gets a call from Mr. B. Mr. A thinks that he is going
to make the first payment before time.
Have you seen the topic of retirement? Mr. A is happy.
He says that the party calls only when they are going to
give money.
Otherwise, they don't even pick up. So Mr. A picked up the
phone very happily.
And when Mr. B said something to him, Mr. A's happiness
turned into sadness.
Mr. B said to Mr. A that there are only a few days left in
4th June 2023.
And I am telling you in advance that my condition is not
good at the moment.
I will not be able to make the payment on 4th June.
The bill I gave you, the cheque I gave you, please take it
to the bank.
He is saying this in advance.
Because if he does not tell him, then Mr. A will take the
cheque to the bank on 4th June.
Then the cheque will not be clear there. Then it will
bounce, it will be dishonored.
Mr. B's bill will be spoiled. And then the case will be
wasted on it.
Whatever it is. So Mr. B does not want that.
Mr. B is saying that I am telling you in advance.
And Mr. A will say that I will punish you. I will complain
to the court.
I don't believe you on 4th June.
So what will you do? Mr. A also knows how the court works.
Then Mr. A will have to go around.
Going to court, fighting a case against someone is not an
ordinary thing.
So Mr. A says that I also want to avoid legal litigation.
Okay, you have told me in advance. But now tell me what to
do next.
I want money. He will not leave the money.
They have mutually decided that we will not go to court.
On 4th June, Mr. B is saying that I will not be able to pay.
And the mutual decision of both is that they will not fight
in court.
They will settle among themselves.
Okay, they will not dishonor, they will not bounce the
cheque.
So Mr. A tells Mr. B that you will have to pay.
Don't pay on 4th June.
How much more time do you need?
Tell me this. Mr. B is saying not much.
You give me one more month.
Not much, give me one more month.
If you go one month ahead from 4th June, what date will you
get? 4th July, 2023.
Now don't add grace days again.
Don't add grace days again.
He is asking for one more month until 4th July, 2023.
Mr. A will say okay.
If Mr. A says okay, then they want to fight in court.
Then go to court.
Dishonor, bounce, meet there.
But their agreement is that okay, we will listen to each
other.
Mr. A said okay.
What did Mr.
A say?
Okay, I give you one more month.
Pay me on 4th July.
But, but, but.
What is Mr.
A saying?
Brother, what will I charge in return for this?
I will charge interest.
In return for this, I will charge interest and go.
He will invest one month's interest.
Brother, did he delay the money for a month or not?
That's why he will invest one month's interest and go.
Will charge one month's interest.
From whom?
From B.
A will charge one month's interest.
From whom?
From B.
Okay? Okay.
This topic is called your renewal.
R-E-N-E-W-A-L Renewal.
Renewal of the bill.
Do you know what will happen in such a case?
The old bill of 4th June, 2023.
The old bill will be cancelled.
What will be done to the old bill?
It will be cancelled.
One is dishonour.
Take it to the court and complain.
One is cancelled with mutual consent.
And then what will happen?
A new bill will be made.
For a month's fresh period.
A new bill will be made.
This is called renewal of the bill.
Renewal means old, cancel.
Make a new one.
Old bill will be cancelled.
And the new bill will be drafted.
This is called renewal of the bill.
Okay, sir.
Okay, done.
Now, how will the entries be in this case?
You only make me do the entries.
Here at A and here at B.
First of all, what will be the entries at the time of sale?
Here at A.
You tell me.
You only tell me.
Kajal.
Didn't you come out of the partnership in 12th class?
Where did the capital account come from?
B account debit.
I taught Kajal so much.
I taught her so much about partnership.
She taught me for 11 months.
Till date.
B account debit to sales account.
Very, very good.
How much is it?
Rs. 12,000.
Okay, sir.
What will happen after that?
Bill will come to him.
Bill receivable will be drafted.
So, he will make the entry.
Bill receivable account debit to B account.
Same.
Rs. 12,000.
Sir, when is the entry of the sale? 1st April.
Sir, when is the entry of the bill? 1st April.
What will happen after that?
Is the bill cleared?
No.
Is there dishonor?
There is no dishonor.
Dishonor means he went to court.
He didn't even go to court.
What is being done to the bill with mutual consent?
It is being cancelled.
The bill is being cancelled with mutual consent.
This will be done on 4th June.
What will be the entry to cancel?
Reverse this entry.
B account debit to bill receivable account.
Reverse this entry.
B account debit to bill receivable account.
Rs. 12,000.
This entry will be reversed.
The above one.
This is the entry to make the bill.
This is the entry to cancel.
That is simple.
Dishonor and cancel.
Both entries are same.
This will be done.
B account debit to BR.
What will happen after that?
Can you tell me?
What will happen after this?
What will be the next step?
Yes.
They are saying a new bill will be made.
Before that, one more small step.
You have given the correct answer.
One more small step will be done.
Before the new bill.
Very good.
Interest will be charged.
Here, the entry to charge interest will be done.
Can you tell me?
Sir, we will debit B.
We will catch him more.
We have to take more money from him.
Is this the only income of A?
Interest? Yes.
Yes. It is compensation.
This is the income.
You will get money.
B account debit to interest.
Sir, how much will it be?
For example.
Your question gave a rate of 10%.
So, 12000 into 10 upon 100.
And sir, for how many months?
You will charge an interest of 1 month.
So, into 1 upon 12.
After solving, it will be 100 rupees.
How much will it be? 100 rupees means 100 rupees.
Okay.
Entry was done with 100 rupees.
After this, a new bill will be made.
Here, a new bill will be made.
And the entry of the new bill is the same.
The entry to make the bill.
Bill receivable account debit to what?
B account.
Bill receivable to B.
How much should I write? 12000 or 12100?
12100.
The money of interest will also be added to the bill.
Right.
Now, in the new bill, how much money do you have to take
from him? 12000 and 100.
So, how much will the new bill be made of?
How much will it be made of? 12100.
12100. Many times, there may be such a point.
That the money of interest.
He is also saying that I will give you this money.
So, in that case, he will come in 100 rupees cash.
And how many will come in bill receivable? 12000.
Okay. Okay, sir.
What will happen after this?
Now, the new bill will be cleared.
What will be the entry to clear the new bill?
Cash or bank account debit to?
Bill receivable.
Account.
12000.
If it was not in cash here.
The whole bill receivable was 12100 rupees.
So, here it will come again.
12100.
Okay.
Do you want to ask anything?
Sure.
Entries here.
Now, we will draft it here.
Right.
Here in B.
We will read it in notes.
How will the entries be made here in B?
Come, let's read the notes once.
Renewal of a bill.
First, let's see the entries here.
Sir, the first entry is at the time of sale.
Debtor account debit to sale.
After that, if the bill is made.
Then bill receivable account debit to debtor.
If the bill is cancelled.
Then debtor account debit to bill receivable.
Entry will be reversed.
If interest is applied.
Then debtor account debit to interest.
If a new bill is made.
Then bill receivable account debit to debtor.
If it is not in the bill.
Say, you are getting cash together.
He is giving the interest money in cash.
Then cash will be divided into two.
Debit to debtor account.
And when the new bill is cleared.
Then bank account debit to bill receivable account.
What will be the entries here?
What will be the entries here, sir?
First, let's buy that stuff.
Purchase account debit to creditor
Then he will sign the bill
Creditor account debit to bill payable
Then interest will be applied on it
Interest is an expense for B
That's why he will debit it according to the rule of debit
all expense
Interest account debit
And who has to pay interest to B?
To A.
So what will he do to A?
Credit. He will increase his liability to A
Amounts of interest
Interest account debit to creditor account
And when a new bill will be made
He will sign and give
Creditor account debit to bill payable
Account 12100 12100 12100 But if B is giving interest
separately
Then creditor account debit will be
Total amount 12100 2 cash will be 100 rupees
Which he has given
And 2 bill payable will be 12000
Means 12000
And when he will make the payment
Then it will be entered
Creditor account debit to bank account
So this was the concept of renewal
Renewal of the bank
We will meet in the annual eclipse for the further
discussion
Thank you.
Bye Bye